documents folder has disappeared

Go into the System/Apple ID/iCloud/iCloud Drive/Options window and see if: 1 - iCloud Drive is enabled; 2 - Desktop & Documents Folders is enabled.

If they are that's why they are missing. You can find your Files in the iCloud Drive sidebar section:

Look for it in iMacHD - data > Users > yourusername.

Catalina uses a new disk management system called APFS, and that is one of the normal side effects.

It's been moved to the Users/Home/Library/Mobile Documents folder:

You must make the iCloud Drive visible in the sidebar in the Finder preferences:

Then click on the iCloud Drive in the sidebar to get to the files in the drive.

Time Machine is actually doing its job properly and is backing up both volumes.

MacOS Catalina treats the two volumes as a single volume in most ways that we users typically interact with our Macs.

All is well, my friend.